SB216 By Senator Ward RFD Judiciary Rd 1 11-FEB-16

SYNOPSIS: Existing law does not provide a specific remedy for the state to pursue damages sustained when a person or entity commits false or fraudulent acts against the state.

This bill would establish the Alabama Medicaid False Claims Act, to provide a remedy for fraudulent claims in the Alabama Medicaid program.

This bill would provide that certain persons who make false claims or commit fraud against the Medicaid program would be liable to the state for three times the amount of damage sustained, a civil penalty, and any associated costs, including attorneys' fees.

This bill would provide for the responsibilities of the Attorney General and private individuals in investigating and proceeding against violators in civil actions.

This bill would prohibit any employer from taking retaliatory action or preventing an employee from disclosing information to government or law enforcement agencies investigating false or fraudulent claims actions.

This bill would also provide for the limitation of actions.

A BILL TO BE ENTITLED AN ACT

To create the Alabama Medicaid False Claims Act, relating to false or fraudulent claims made upon the Alabama Medicaid program; to subject certain violators making false claims or committing fraud against the Alabama Medicaid Agency to treble damages and civil penalties; to provide for associated investigative costs; to provide for exceptions; to provide for the responsibilities of the Attorney General and private individuals in investigating and proceeding against violators in civil actions; to prohibit retaliatory actions by employers against employees who disclose information to government or law enforcement agencies investigating false claims; and to provide for the limitation of actions.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. The act shall be known and may be cited as the Alabama Medicaid False Claims Act.

Section 2. For the purposes of this act, the following terms shall have the following meanings:

(1) CLAIM. Any request or demand, whether under a contract or otherwise, for money or property and whether or not the state has title to the money or property, based on costs or projected costs and including any entry or omission in a cost report or similar document, book of account, or any other document that supports or attempts to support the claim that satisfies either of the following:

a. Is presented to the Alabama Medicaid Agency, its employees, agents, contractors, or its designated fiscal intermediary.

b. Is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Alabama Medicaid Agency's behalf or to advance an Alabama Medicaid Agency program or interest, and if the Alabama Medicaid Agency provides or has provided any portion of the money or property requested or will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded.

(2) KNOWING or KNOWINGLY. A person, with respect to information, satisfies any of the following:

a. Has actual knowledge of the information.

b. Acts in deliberate ignorance of the truth or falsity of the information.

c. Acts in reckless disregard of the truth or falsity of the information.

(3) PERSON. Any natural person, corporation, firm, association, organization, partnership, limited liability company, business, or trust.

(4) MATERIAL. Having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.

(5) OBLIGATION. An established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.

Section 3. (a)(1) Except as otherwise provided in subdivision (3), a person who does any of the following is liable to the state for a civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than eleven thousand dollars ($11,000) for each claim, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990, plus three times the amount of damages which the state sustains because of the act of that person and the costs of a civil action brought to recover any penalty or damages:

a. Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval to the Alabama Medicaid program.

b. Knowingly makes, uses, or causes to be made or used, a false or fraudulent record or statement material to a false or fraudulent claim to the Alabama Medicaid program.

c. Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Alabama Medicaid program, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Alabama Medicaid program.

d. Conspires to commit a violation of paragraph a., b., or c.

(2) No proof of specific intent to defraud is required under this section.

(3) The court shall assess not less than two times the amount of damages which the state sustains because of the act of the person if it finds all of the following:

a. The person committing the violation of this subsection furnished officials of the state responsible for investigating false claims violations with all information known to the person about the violation within 30 days after the date on which the defendant first obtained the information.

b. The person fully cooperated with any state investigation of the violation of this subsection.

c. At the time the person furnished the state with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced with respect to the violation, and the person did not have actual knowledge of the existence of an investigation into the violation.

(b)(1) A person who engages, has engaged, or proposes to engage in any act described by subsection (a) may be enjoined in any court of competent jurisdiction in an action brought by the Attorney General.

(2) The action shall be brought in the name of the state and shall be granted if it is clearly shown that the state's rights are being violated by the person and the state will suffer immediate and irreparable injury, loss, or damage pending a final judgment in the action, or that the acts or omissions of the person will tend to render such final judgment ineffectual.

(3) The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent any act described by subsection (a) by any person, or as may be necessary to restore to the Medicaid program any money or property, real or personal, which may have been acquired by means of the act.

Section 4. (a) The Attorney General shall diligently investigate a violation of this act. If the Attorney General finds that a person has violated or is violating this act, he or she may bring a civil action under this section against the person.

(b)(1) A private person may bring a civil action for a violation of this act for the person and for the state. The action shall be brought in the name of the State of Alabama. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.

(2) A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the state. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The state may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information.

(3) The state, for good cause shown, may move the court for extensions of the time during which the complaint remains under seal under subdivision (2). The motion may be supported by affidavits or other submissions in camera. The defendant may not be required to respond to any complaint filed under this section until 20 days after the complaint is unsealed and served upon the defendant.

(4) Before the expiration of the 60-day period or any extensions obtained under subdivision (3), the state shall do either of the following:

a. Proceed with the action, in which case the action shall be conducted by the state.

b. Notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.

(5) When a person brings an action under this subsection, no person other than the state may intervene or bring a related action based on the facts underlying the pending action.

(c)(1) If the state proceeds with the action, it shall have the primary responsibility for prosecuting the action, and may not be bound by an act of the person bringing the action. The person shall have the right to continue as a party to the action, subject to the limitations set forth in subdivision (2).

(2)a. The state may dismiss the action notwithstanding the objections of the person initiating the action, if the person has been notified by the state of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.

b. The state may settle the action with the defendant notwithstanding the objections of the person initiating the action, if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under the circumstances. Upon a showing of good cause, the hearing may be held in camera.

c. Upon a showing by the state that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the state's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may impose limitations on the person's participation, such as any of the following:

1. Limiting the number of witnesses the person may call.

2. Limiting the length of the testimony of such witnesses.

3. Limiting the person's cross-examination of witnesses.

4. Otherwise limiting the participation by the person in the litigation.

d. Upon a showing by the defendant that unrestricted participation during the course of the litigation by the person initiating the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.

(3) If the state elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the state so requests, it shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts, at the state's expense. When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the state to intervene at a later date upon a showing of good cause.

(4) Whether or not the state proceeds with the action, upon a showing by the state that certain actions of discovery by the person initiating the action would interfere with the state's investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay the discovery for a period of not more than 60 days. Such a showing shall be conducted in camera. The court may extend the 60-day period upon a further showing in camera that the state has pursued the criminal or civil investigation or proceedings with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.

(5) Notwithstanding subsection (b), the state may elect to pursue its claim through any alternate remedy available to the state, including any administrative proceeding to determine a civil monetary penalty. If any alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in the proceedings as the person would have had if the action had continued under this section. Any finding of fact or conclusion of law made in the other proceeding that has become final shall be conclusive on all parties to an action under this section. For purposes of this subdivision, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of jurisdiction, if all time for filing such an appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.

(d)(1)a. If the state proceeds with an action brought by a person under subjection (a), a person, subject to paragraph b., shall receive at least 15 percent, but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action.

b. Where the action is one that the court finds to be based primarily on disclosures of specific information, other than information provided by the person bringing the action, relating to allegations or transactions in a criminal, civil, or administrative hearing, report, audit, investigation, or from the news media, the court may award such sums as it considers appropriate, but in no case more than 10 percent of the proceeds, taking into account the significance of the information and the role of the person bringing the action in advancing the case to litigation.

c. Any payment to a person under paragraph a. or b. shall be made from the proceeds. The person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney's fees and costs. All expenses, fees, and costs shall be awarded against the defendant.

(2) If the state does not proceed with an action under this section, the person bringing the action or settling the claim shall receive an amount that the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than 25 percent and not more than 30 percent of the proceeds of the action or settlement and shall be paid out of such proceeds. The person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorney's fees and costs. All expenses, fees, and costs shall be awarded against the defendant.

(3) Whether or not the state proceeds with the action, if the court finds that the action was brought by a person who planned and initiated the violation upon which the action was brought, then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action that the person would otherwise receive under subdivision (1) or (2), taking into account the role of that person in advancing the case to litigation and any relevant circumstances pertaining to the violation. If the person bringing the action is convicted of criminal conduct arising from the person's role in the filing of the false claim upon which action is brought pursuant to this act, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. The dismissal does not prejudice the right of the state to continue the action.

(4) If the state does not proceed with the action and the person bringing the action conducts the action, the court shall award to the defendant its reasonable attorney's fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.

(e)(1) In no event may a person bring an action under subsection (b) that is based upon allegations or transactions that are the subject of a civil suit or an administrative civil monetary penalty proceeding in which the state is already a party.

(2)a. The court shall dismiss an action or claim brought under subsection (b), unless opposed by the Attorney General, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed under any of the following circumstances:

1. In a criminal, civil, or administrative hearing in which the state or its agent is a party.

2. In a state report, hearing audit, or investigation.

3. From the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

b. For purpose of this subdivision "original source" means an individual who either:

1. Prior to a public disclosure has voluntarily disclosed to the state the information on which allegations or transactions in a claim are based.

2. Has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and voluntarily provided the information to the state before filing an action under this section.

(f) The state is not liable for expenses that a person incurs in bringing an action under this section.

(g)(1) Any employee, contractor, agent, or associated others who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action under this section or other efforts to stop one or more violations of this act, shall be entitled to all relief necessary to make the employee whole.

(2) Relief shall include reinstatement with the same seniority status the employee, contractor, agent, or associated others would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney's fees. An employee may bring an action in the appropriate court for the relief provided in this subsection.

(3) A civil action brought pursuant to this subsection may not be brought more than three years after the date when the retaliation occurred.

Section 5. (a) A subpoena requiring the attendance of a witness at a trial or hearing conducted under this act may be served at any place in the United States.

(b) A civil action under this act may not be brought:

(1) More than six years after the date on which the violation of this act is committed; or

(2) More than three years after the date when facts material to the right of action are known or reasonably should have been known by the official of the state charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.

(c)(1) If the state elects to intervene and proceed with an action brought under this act, the state may file its own complaint or amend the complaint of a person who has brought an action under this act to clarify or add detail to the claims in which the state is intervening and to add any additional claims with respect to which the state contends it is entitled to relief.

(2) For statute of limitations purposes, any state pleading shall relate back to the filing date of the complaint of the person who originally brought the action, to the extent that the claim of the state arises out of the same conduct, transactions, or occurrences set forth, or attempted to set forth, in the prior complaint of that person.

(d) In any action brought under this act, the state shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.

(e) Notwithstanding any other provision of law, the Alabama Rules of Criminal Procedure, or the Alabama Rules of Evidence, a final judgment rendered in favor of the state in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty shall estop the defendant from denying the essential elements of the offense in any action that involves the same transaction as in the criminal proceeding and that is brought under this act.

Section 6. Any action under this act may be brought in any judicial circuit in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts business, or in which any act proscribed by this act occurred. A summons as required by the Alabama Rules of Civil Procedure shall be issued by the appropriate circuit court clerk and served at any place within or outside the United States.

Section 7. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Fraud

False Claims

Medicaid

Public Assistance

Attorney General

Civil Procedure

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